Tiger’s Transgressions Cost Him $50 million

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ORLANDO, FL - FEBRUARY 17: Tiger Woods (R) jogs with an unidentified friend near his home on February 17, 2010 in Orlando, Florida. The PGA Tour has just announced that Tiger Woods will hold a press conference this Friday morning (February 19, 2010) at their headquarters. (Photo by Sam Greenwood/Getty Images) *** Local Caption *** Tiger Woods

Please pardon this lapse in golf etiquette. But, before Tiger Woods even tees off at the Masters next month, we must tally all his shots. His endorsement portfolio has taken some deep slices this year.

The scorched scorecard: Gatorade, Accenture and AT&T formally dropped Woods as a corporate face while Tag Heuer and Gillette (part of Procter & Gamble Co.) stripped him from their ads. Procter and Gamble’s CEO has said he’s unsure if Woods ever will appear in another Gillette commercial.

With Woods’ return to tournament golf April 8 after a winter-long blizzard of admitted marital infidelities, scripted apologies, and stints in sex-addiction therapy and family counseling, what marketing price has he paid for the drama? What has all this cost Woods the pitchman? At a minimum, $25 to $30 million per year, say several industry experts. But one sports marketing CEO pins the damage at $50 million annually – or roughly half the money Woods was reaping from sponsors before he sat down to Thanksgiving dinner.

Only Woods and his wife, Elin – and their attorneys – know the precise amount, of course. The loss projections are based on the value of his five depleted sponsorship deals as reported by news organizations. That gap in the estimated carnage – $25 million to $50 million annually – is due, the experts said, to the unknown fine print in Woods’ contracts: Did the sponsors who cut Woods offer him termination fees, was he also pocketing some percentage of sales revenue in those companies, and is he still being paid by Gillette and Tag Heuer, though their ads are Tiger-less?

“Even if it’s $25 to $30 million, that’s still a massive amount of money to come off the table,” said John Rowady, president and founder of rEvolution, a Chicago-based sports marketing and media agency.

So far, Woods seems to have taken the biggest financial bath from the Gatorade termination. In 2007, Golfweek reported Woods could earn $20 million annually for lending his name to the “Gatorade Tiger” drink. His sponsorships with AT&T and Accenture each were worth $7 million per year, according to The Guardian and New York Daily News. In 2007, agreed to hawk Gillette razors – a deal totaling as much as $20 million, according to The Boston Globe.

Bob Williams, CEO of Burns Entertainment & Sports Marketing, suggests Gillette has since paid Woods $7 million to $10 million a year – based on Woods’ endorsement rate in 2007. Williams further estimates that the value of Woods’ Tag Heuer sponsorship, inked in 2002, was “not quite as high as Gillette’s,” though not far below.

“So I think we are looking at loss in the $50 million range (annually),” said Williams, whose Evanston, Ill. firm negotiated Michael Jordan’s deal with Hanes and dozens of other sponsorships.

If Williams is correct, Woods’ actions and his sponsors’ reactions have halved an endorsement portfolio that, late last year, was earning more than $100 million annually, according to Forbes magazine. At that time, golf prize purses accounted for less than 15 percent of Woods’ income.

And yet, even if Woods has suffered a $50 million divot in sponsor profits, he retains the title – for now – as America’s top sports endorser. According to a 2009 Sports Illustrated ranking of athlete earners, golfer Phil Mickelson was a distant second to Woods in annual endorsements ($46.6 million) while the NBA’s LeBron James placed third ($28 million).

“Nobody’s going to be holding a charity event for Tiger Woods,” Williams said. “He’s not hurting for money, let’s be honest.”

“But if he’s still No. 1, it won’t be for long,” added Brandon Steiner, CEO of Steiner Sports Marketing in New Rochelle, NY. The firm’s client network includes ESPN and Major League Baseball. “If there’s a company looking right now to add someone to their roster as an endorser, Tiger’s name is not even on that list. His overall portfolio will never be the same.”

Not all sports marketing experts are in harmony on that point. Some believe Woods can again become a $100-million-a-year marketing machine. One of the many caveats needed to accomplish that: He must remain dominant on the course, said Paul Swangard, managing director of the University of Oregon's Warsaw Sports Marketing Center. Not an easy feat with the surplus attention (if that’s even possible) Woods will face on tee boxes, fairways and greens.

Then again, with more eyes on Woods, “there will be brands that covet his visibility,” added Swangard, who deemed Woods’ full endorsement comeback as “plausible.”

One of the most complex obstacles Woods – the pitchman – must conquer is to somehow mend the distrust and dislike that many women now hold for an admitted serial cheater, marketing insiders agreed. “For the foreseeable future,” Swangard said, “any category in which a female controls the expenditure is probably off limits.”

If he can stay out of the tabloids, how long might it take for Woods to rebuild his endorsement empire?

“Roughly 5 to 10 years,” estimated Robert Tuchman, executive vice president of Premier Global Sports, based in Bannockburn, Ill. “I never like to say never – especially with a person who has many years left to play golf. ... He will never be viewed in the same light. ... Possibly on the course but never off the course. As long as brands are in the business of selling their product it is highly unlikely that he will command the same (corporate) attention as prior to all of this.”

The more painful measure, said Williams of Burns Entertainment & Sports Marketing, is to calculate how high Woods could have soared as an endorser had the world never learned of his infidelities. “You can’t just look at it from where they fell out of grace versus where they are now; it’s where they are now and where they could have been.”

Besides, Williams asks, will Woods seek to replace his lost endorsement deals? He can pad his income by playing in more overseas tournaments – where he is paid fat appearance fees – and by staying with the companies, like Nike, that chose to remain by his side. “With all that’s happened, and with the premium he puts on privacy, why would you go back into this arena?” Williams asks. “Why would he try to resurrect the career he had, and or make it bigger than it was, when it goes against every tenet of privacy that he holds dearly?”

“Privacy,” incidentally, is the name of Woods’ yacht.

“The real loss,” contends Steiner, “is not even on the money end ... It’s really about the influence he could have had. He had the ability to cross all barriers, all ages, and be that guy. (Like Muhammad) Ali and Jordan – on every street corner in the world, people know that guy, know him by one name. That’s power and influence. And whatever he wanted to do – he could have moved out of his involvement with sports into his involvement in any cause, any issue he wanted. It’s something special. He’s definitely lost that.

“God, you get such an opportunity once in a lifetime – once in our lifetime – and you lost your mind. But, it happens. That’s what happens with fame and fortune.”